Senate testimony on high drug prices: shots

The leaders of seven giants of the drug industry were forced to defend the prices and business practices of their sector at Capitol Hill on Tuesday, as legislators blamed them for not putting patients before profits.

"Prescription drugs have not become excessively expensive by accident," said Sen. Ron Wyden, D-Oregon. "The prices of drugs are astronomical because that's where the pharmaceutical companies and their investors want them."

At a hearing before the Senate Finance Committee, pharmaceutical industry leaders acknowledged that their prices were high for many patients, but they rejected any responsibility for the insurance industry, the government, and the government. intermediaries, known as pharmacy benefit managers.

They each briefly acknowledged that they had a role to play in reducing drug prices. But they defended their sector by touting their multibillion-dollar investment in research and development and praising advances in cancer, hepatitis C, schizophrenia, and autoimmune diseases .

"Last year, Janssen invested $ 8.4 billion in global research and development, making Janssen one of the leading investors in research and development across all sectors, everywhere." around the world, "said Jennifer Taubert, global president of Johnson & Johnson Pharmaceuticals, owner of Janssen. .

The leaders of the pharmaceutical industry also pointed out that the current prices that they set for drugs are not those actually paid by insurance companies or drug benefit managers, the middlemen who negotiate rebates and rebates on behalf of employers or insurers, including companies such as CVS Caremark. and Scripts Express.

"We want these discounts, which lower net prices, to benefit patients," said Olivier Brandicourt, CEO of Sanofi, which makes Lantus one of the most expensive insulin brands on the market, including the selling price has gone from $ 244 to $ 431 since 2013, according to the Committee.

"Unfortunately, in the current system, savings on rebates are not systematically passed on to patients in the form of lower deductibles, co-payments or co-insurance amounts," said Brandicourt in a testimony prepared for the 39; hearing.

According to research firm SSR Health, the net price of Lantus has decreased by 28% over the past two years, due to these discounts and rebates.

"Selling at current prices will not be enough to solve the problem of direct costs for patients," Brandicourt said.

But senators had little patience for these arguments.

"For a patient taking a drug without competition, the current price becomes very important," said Sen. Chuck Grassley, chair of the committee, R-Iowa. "I've heard people skip doses of their prescription drugs to make them last until the next paycheck."

Wyden piled up.

"I think you and the other players in the sector against this crucial problem, which is actually to lower catalog prices," he said. "Reducing these catalog prices is the easiest way for consumers to pay less at the pharmacy counter."

Many patients must pay the total price of a prescription drug until they reach their deductible, while others have payments calculated as a percentage of the price displayed. Thus, the higher list prices often result in higher costs at the pharmacy counter, even when pharmacy benefit managers and insurers have negotiated discounts.

Several pharmaceutical company executives said they were supporting a proposal by the Trump administration to change the current system whereby drug prices are set using secret rebates negotiated by PBMs.

The change would make these discounts illegal and would force MPPs to negotiate discounts in advance, so that customers would get discounts at the pharmacy counter, even if they had not yet reached their discounts. franchise.

Several of the CEOs, under pressure from Grassley, said they would lower their list prices if this proposal was finalized and the rule applied to government and commercial prescription drug plans.

"Our intention is clearly not to keep a single dollar of these discounts, we will try to transfer every penny to patients," said Albert Bourla, CEO of Pfizer.

Taubert of Johnson & Johnson stated that the final price of the company would depend on the fact that additional fees were imposed by the pharmaceutical benefits managers.

However, they said they did not want the government to negotiate drug prices directly through Medicare, a proposal tabled by Democrats and originally adopted by President Trump.

"The government should not directly control the price of drugs, nor through price controls by the federal government, nor worse, by outsourcing prices to other countries," said Brandicourt.

Even though companies are protesting that the highest list prices on their products do not reflect what they actually earn, drug manufacturers have always enjoyed the highest profit margin of all sectors.

Pharmaceutical manufacturers' profit margins have exceeded 26% in the last three years and 22% over the past decade, according to a CVS Health submission, citing Macrotrends.net as a source.

The company's executives did not back another Trump proposal to tie the price that Medicare pays for its drugs at prices paid in other developed countries.

"We need an American solution to this American challenge," said Taubert of Janssen's Johnson & Johnson unit.

Senator Wyden asked Richard Gonzalez, CEO of AbbVie, about why his company's drugs cost an average of 40% less in Germany and France than in the United States. (AbbVie manufactures Humira, which generates approximately $ 18 billion in revenue annually for the company.)

"You have a double standard," said Wyden. "You are ready to sit down and water the American consumer and give the breaks to people abroad."

Gonzalez acknowledged that the company was making profits in those countries, even with lower prices, but warned disastrous consequences if prices in the United States fell to these levels.

"If a market the size of the United States collapsed to reach the bottom of this pricing model, I can simply tell you that AbbVie would not be able to invest in the level of R & D in which she invests today, "said Gonzalez.

In response to Grassley's question, all CEOs said they took into account the risk of negative public opinion when setting list prices. The Trump Administration has proposed requiring companies to include catalog prices of their drugs in all of their consumer advertising, a plan they resisted.

They also stated that they took into account the reaction of federal officials to the announcement of their awards.

"The federal government is a very important aspect of our deliberations," said Pascal Soriot of AstraZeneca, a response echoed by the seven leaders of the sector.